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Commissioner of Income-tax-12, Mumbai Versus Jayant H. Modi

2015 (7) TMI 479 - BOMBAY HIGH COURT

Deemed dividend - whether Tribunal could not have applied section 2(22)(e)(ii) because, loans and advances were obtained from M/s. JMC Securities Pvt. Ltd. but money lending was not a substantial part of the business of that company? - Held that:- Tribunal referred to the assessment order in the case of M/s. JMC Securities Pvt. Ltd. for the year under consideration, namely 2006-07, wherein the nature of the business of that company was indicated as finance. The company continued in the business .....

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hat that the lending of money is a substantial part of the business of M/s. JMC Securities Pvt. Ltd. The addition made by the assessing officer and sustained by the Commissioner was not valid and legal, particularly in the background facts. In the light of the undisputed factual position, we are of the view that the Tribunal's order is correct and reliance placed by it on Commissioner of Income-tax Versus Parle Plastics Ltd. [2010 (9) TMI 726 - BOMBAY HIGH COURT ] is not misplaced. - Decided aga .....

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MENON, JJ. For The Suresh Kumar for the Appellant. For The Respondent : Percy Pardiwalla, Sr. Adv. and Sameer G. Dalal ORDER 1. This appeal of the revenue challenges the order passed by the Income Tax Appellate Tribunal, Mumbai dated 23rd November, 2012. The assessment year is 2006-07. 2. The assessee's appeal has been allowed by the Tribunal and that is why the revenue being aggrieved is before us. 3. Mr. Suresh Kumar submits that the questions of law framed at pages 3 and 4 are substantia .....

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In other words, lending of money was not a substantial part of the business of M/s. JMC Securities Pvt. Ltd. from whom loan was obtained by the assessee. The Commissioner had observed that M/s. JMC Securities Pvt. Ltd. was advancing money only to one entity, namely, M/s. Sonal investment. Rest of the sums were advanced to the employees of M/s. JMC Securities Pvt. Ltd., therefore, the exclusionary clause was not applicable and reliance placed on the judgment of this Court in the case of CIT v. P .....

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company advanced loans to only to M/s. Sonal Investment and its employees. 5. However, while the Tribunal was deciding the appeal, it referred to all the material and held that during the year under consideration, the assessee received loans of ₹ 551.45 lakhs from M/s. JMC Securities Pvt. Ltd. wherein he was holding 1,53,025 equity shares out of total 3 lakhs equity shares issued. The assessee was beneficial owner of shares in the said company holding more than 10% shares and if that comp .....

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